The priority as finance minister would be to get out of the businesses that the government should not be in, believes Alok Jain of Weekend Investing.
In an interview to Moneycontrol, he shares that the divestment programme of the country has gone too slow in the last eight years and focus on the divestment and deployment of funds into infrastructure creating jobs should be the sole focus at this stage.
On the metals space, the smallcase manager and founder of Weekend Investing, who has been in the stock markets for more than 27 years now, believes the Chinese New Year is over and the economy will start to function from next week.
"I would expect the demand to pick up dramatically and prices of all metals and commodities to stay strong," says Jain.
Most experts are saying there's no recession, it's only slowdown in the US and Europe, and worries related to inflation and rate hikes are over now. What challenges do you see for the equity market in the next six months?
I think no expert really knows ever what is coming. It is this constant day-and-night forecasting that has been leading to the ruin of the retail investors that remain confused. Everyday somebody or the other will be right even though 80-90 percent of forecasts will go wrong and hence flipping the coin is a much higher probability of hitting the target.
Hence the only solution is BBC – Bhav Bhagwan Che – principle followed by weekend investing. We follow the market trends and don’t try to forecast our way into the future.
Having said that the real facts of the challenges ahead of us are the sticky inflation, the US reaching a point of interest rate that cannot be sustained for too long, and the crippling blow to the global demand this situation has caused. How will the world get out of this mess is anybody’s guess.
India is still in a much superior position vis-à-vis the rest of the world with much lower debt-to-GDP ratio, high numbers of young working age population and a momentum in the economy that is an envy to the rest of the world. We could easily tread this path of nominal 10-12 percent GDP growth rate for many years to come if any external headwind does not disrupt it.
The metals space has seen a healthy run-up, rising more than 50 percent in the last seven months. Do you expect more run-up in this space?
The Chinese New Year is over and the economy will start to function from the next week. I would expect the demand to pick up dramatically and prices of all metals and commodities to stay strong.
If you were the finance minister, what would have been your priority policies to boost growth?
My main priority as the FM would be to get out business that government should not be in. The divestment programme of the country has gone too slow in the last eight years and focus on the divestment and deployment of funds into infrastructure creating jobs should be the sole focus at this stage.
Do you still see some headwinds for IT space in coming months or has the space bottomed out now?
Nasdaq is the leading indicator for the Indian IT space. The stocks in that index have returned from 'over valuation' to 'fair valuation' perhaps but earnings are yet to be updated for the current and future potential slowdown. Once that happens and if that happens we can.
Have you seen quarterly earnings announced so far? Have you spotted any trend about future earnings growth outlook?
We don’t use the quarterly earnings in our methodology, rather feel that quarter results are a snapshot of the period gone by. They provide no new information to the market as such. They say nothing about the future and we tend to extrapolate the past results for our convenience on our excel sheets. No I have no view on the quarter results.
The trends in metals, auto and PSBs are strong and those in pharma, private banking, FMCG, and quality consumption stocks has been weak.
Do you think urban consumption is faltering?
As an urban consumer, when I see around myself, I see no dearth of consumption demand. There are queues to buy cars, property transactions are picking pace, malls and cinemas are full and airports are the new bus stands. Anecdotally there is no demand falter I can see.
Have you spotted any new themes in the new calendar year?
We are seeing gold emerge out of the shadows in the last few months. The hedge that gold provides to the equity portfolio is of enormous value and everybody must have this insurance in their portfolios to save themselves when equity is in the line of fire. Some good ways to invest in it could be through the sovereign gold bonds.
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